The Companies Act, 2013 defines “small company” based on their financial parameters, with the objective of providing certain regulatory and compliance framework exemptions. A recent notification by the Ministry of Corporate Affairs (MCA) has significantly revised the financial thresholds.
Companies Act 2013, Latest Definition
“small company” means a company, other than a public company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than ten crore rupees ; and
(ii) turnover of which as per profit and loss account for the immediately preceding financial year does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than one hundred crore rupees
Provided that nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act;
The Companies (Amendment) Act, 2018 increased these limits to:
- ₹10 crore for paid-up share capital (earlier ₹5 crore) and
- ₹100 crore for turnover (earlier ₹20 crore).
Revised Thresholds (Effective December 1, 2025)
Notification No. G.S.R. 880(E) dated December 1, 2025, the MCA amended the Companies (Specification of Definition Details) Rules, 2014.
A private company will qualify as a small company if:
- Paid-up Share Capital: Does not exceed ₹10 crore, and
- Turnover: Does not exceed ₹100 crore (immediately preceding financial year).
Exclusions
Even if the financial criteria is within the definition of small companies u/s 2(85) of the Companies Act, 2013, the following entities are are not included from being classified as small companies:
- Holding companies or subsidiary companies
- Section 8 companies (non-profit entities)
- Companies or bodies corporate governed by any special Act.
Note that subsidiaries for a foreign company is not a small company by default.
Some benefits from this notification
- Brings a larger number of growing private companies within the small company definition.
- Reduced compliance burden (like two board meetings in a year, less penalties etc.)
- May support ease of doing business, since small companies attract lesser compliances.